… Microsoft should act significantly faster to clarify the situtation, especially in the critical feature phone replacement market where the only real growth opportunities remain. Otherwise it could loose the mobile market even before starting the battle. Such conclusions are also strengthening my recent Nokia should introduce an Android forked smartphone for the $75-120 range in order to enhance its Asha Software Platform strategy and 2014 will be the last year of making sufficient changes for Microsoft’s smartphone and tablet strategies, and those changes should be radical if the company wants to succeed with its devices and services strategy conclusions posted here on January 17.
In addition, there are extremely worrying signs on the horizon as per Jan 27, 2014:
– MediaTek MT6592-based True Octa-core superphones are on the market to beat Qualcomm Snapdragon 800-based ones UPDATE: from $147+ in Q1 and $132+ in Q2
Just How Much Brand Damage Is Microsoft Doing To Nokia? [by Tero Kuittinen* on Forbes, Jan 23, 2014]
Analysts were widely expecting Nokia to sell 10 M smartphones in 4Q 2013. The company ended selling 8.2 M units, down from 8.8 M in the previous quarter. It’s a massive miss considering the strong sequential volume growth Nokia had delivered during the spring and autumn periods.
Nokia had real smartphone volume traction in the autumn and it was expected to continue – yet after the September announcement of Microsoft acquisition, device sales actually started to decline. For Europeans, the explanation is obvious: consumer backlash as Microsoft association started tarnishing the Nokia brand. Yet for Microsoft executives, this may come as a complete shock.
From the West Coast perspective, Nokia has been a fading phone brand for twelve years. The deep emotional connection many European and Asian consumers have with the Nokia brand is not obvious for American tech executives. And this is why many transcontinental mergers fail: executives have real trouble gauging brand essence across continents. Nokia used to inspire Apple-like loyalty in consumers as recently as around 2005-2007. A residue of that affection buoyed its Lumia sales drive in first three quarters of 2013.
The scale of that backlash is hard to gauge – but 4Q 2013 seems like a genuinely ominous sign for the future. Nokia was expected to deliver 11-13% sequential smartphone volume growth. It delivered -7% decline – an abrupt reversal that blindsided both Wall Street and industry analysts. Something in the European and Asian attitudes towards the Microsoft purchase of Nokia has eluded American tech experts.
* His description of himself:
I have followed the mobile handset market since late Nineties. I spent eight years doing sell-side equity research on Wall Street, starting out at Alliance Capital. I have expanded from handset industry to mobile app market over the past three years. Now back to mobile telecom industry – mobile diagnostics, mobile trend research, mobile expense management. I regularly talk to handset distribution, OS development and app industry pros in Europe, Asia, Latin America and USA. I pay particular attention to tracking phone and app sales trends in Brazil, India, China, South Africa, Nigeria, Spain, Italy, Germany and the UK.
Lumia sales slump sabotages Microsoft’s strategy before it starts [Computerworld, Jan 23, 2014] in a rearranged way
But analysts aren’t buying the idea that Microsoft’s Nokia acquisition poisoned consumers’ minds …
… Instead, the experts pinned the blame on Nokia first and foremost, and secondly on the all-too-natural distraction caused by the Microsoft acquisition. …
Carolina Milanesi of Kantar Worldwide Panel:
There may have been some backlash in buying Lumia, but for the most part consumers don’t care about these things.
It’s like Nokia said, ‘It’s not our problem anymore.’ The numbers are the evidence that with the acquisition looming, Nokia essentially washed its hands of the business, and probably reduced its promotional efforts and lowered carrier incentives.
There’s still an opportunity for Microsoft, but it needs to work with the carriers and look for those users who have low-end Android phones, who have not invested in the ecosystem.
Those are the people Microsoft-Nokia should be going after. But they need to get devices on the market.
Tuong Nguyen, principal analyst at Gartner:
The wariness would come more from the vendor [i.e. mobile carriers]partnership side rather than consumers.
The challenge is two parts for Microsoft now.
First, the feature phone business is scaling down as they ramp up the Lumia line, but that’s not ramping up as fast as the feature phone is ramping down. And as the industry as a whole has seen less true innovation, the fourth quarter isn’t a blow-out quarter like it once was. The market’s hitting the point, in developed countries anyway, where it’s a replacement market now.
It is critical that when [Microsoft] lands the deal, they go out and show something and say something. Microsoft cannot take six months to do that. It would kill them.
Patrick Moorhead, principal analyst at Moor Insights & Strategy:
Microsoft does have a distribution problem. When only two out of 100 phones are Windows Phone, it’s very hard to drive meaningful share, it’s hard to get developers excited, and creates a vicious circle.
The top of everyone’s mind in the channel and among developers is, ‘What’s next, Microsoft? How are you going to drive volume?’ It needs a very early disclosure of what it wants to be in mobile, and must move as quickly as possible to do that.
I don’t think Build is early enough, but I do think that’s where they’ll give some disclosure.
Microsoft will want to take advantage of the friendly environment at Build, where developers who are arguably pro-Microsoft may be able to influence those who are on the fence.